Tom Bergin’s Profile

Exxon envy?

A cynic might say they had seen it all before:New CEO of a big oil company, which is under pressure from shareholders, announces a wide-ranging restructuring that will make the company look like the much-admired industry leader.

Tony Hayward did it at BP in 2007 and Peter Voser, due to step up to the top job at Royal Dutch Shell Plc on July 1, did it on Wednesday.

Perhaps fearing that restructurings, like jokes, don’t amuse as much on the retelling, Shell went one further than BP. While the London-based oil major said it would adopt Exxon’s approach of standardising procedures across its businesses, Shell said it would redraw its business units in the mould of Exxon’s.

Despite this, the Anglo-Dutch oil major’s announcement failed to attract the warm reaction investors gave BP’s aping of Exxon. Shell’s shares fell and analysts said Shell was coming late to the cost cutting and standardisation game.

Is this fair?

Shell may be behind BP but it has not just discovered cost cutting. At least since January, the company has been sending regular emails to staff demanding they slash overheads and the cost of contractors.

BP has indeed turned itself around in recent years, closing performance gaps against rivals, most notably in its U.S. downstream business. Some investors see this as Hayward’s restructuring paying dividends. Others say the downstream underperformance was due to problems at BP’s Texas City refinery which shut after an explosion and a hurricane, and that the recovery would have happened whoever was in charge.

Investors’ cool response to Shell’s restructuring may reflect scepticism about whether, in an industry where top management is usually made up of company lifers, any oil company can successfully adopt Exxon’s supremely profitable culture.

On the other hand, it could be that, at a time when the world’s largest oil company by market value is proving no more successful than rivals at addressing the industry’s biggest headache – falling oil and gas production — investors don’t just don’t get why everyone wants to be Exxon.